Unlocking Global Growth for UK Ecommerce Sellers

Elspeth: Hi everyone, my name is Elspeth and I'm the UK Go-To-Market Manager for A2X. A2X is an accounting automation software for the world's leading ecommerce brands, as well as their accounting and bookkeeping partners.

I'm joined today by two guests who each have a wealth of experience helping UK-based businesses unlock growth and stay compliant. Victoria Port is our first guest, she's the founder of MVP Bookkeeping, and I've been privileged to work with Victoria over a number of years in different formats. She runs a bookkeeping practice in Cornwall that specializes in working with ecommerce sellers. Victoria also used to be part of the A2X team. It's great to have you with us here today, Victoria. Can you just tell us a bit more about MVP Bookkeeping and the type of clients you work with?

Victoria: Thank you, yeah, it's great to be here with you too. I work with small seller startups operating from their dining room table with a big dream, right the way through to larger high volume global sellers. And I provide peace of mind and a personal touch to my clients, as I've got extensive knowledge of the ecommerce industry. At MVP Bookkeeping, we provide a full UK VAT and accounting service to our clients, and that really helps them to scale and get ahead of their compliance requirements.

Elspeth: That's great. And it was great to see you becoming a Gold Partner lately, Victoria, that was exciting. Okay, so our second guest is Elliot Martin, the Partnerships Manager at Taxually. Taxually is a platform that automates VAT and sales tax registration globally, takes care of reporting and filing across multiple countries, and gives ecommerce businesses a single dashboard that's audit ready for global compliance when it comes to their international tax requirements. So welcome, Elliot, can you tell us a bit more about Taxually?

Elliot: Hi everyone, thank you, Elspeth, for having me on, really appreciate it. Yeah, of course, I'll give you an overview of Taxually, especially on the topic of unlocking global growth. That's essentially what we do, but from a tax compliance perspective. Anyone who's selling internationally, cross-border, you're going to come up against tax blockers, which make it hard to expand, and our mission is to simplify that and enable your global growth. Taxually is an easy to use software solution that enables you to register and file for VAT and sales tax globally, in over 85 countries now. We integrate directly with your sales channels, Shopify, Amazon, Stripe. We've been going for about seven or eight years now, supporting over 20,000 businesses globally, from your single-person startup just getting off the ground all the way through to your larger enterprise clients, like the BBC, like GoPro.

Elspeth: Amazing. Okay, so if you do want to get in touch with MVP Bookkeeping or Taxually, we're going to include their links in the description at the end of this video so you can check them out there.

So in this video, we're going to share a few straightforward tips spanning bookkeeping basics and VAT/sales tax checks that UK ecommerce sellers should nail down before expanding their businesses to new international markets.

A quick disclaimer on this video, although we'll be talking about VAT and sales tax, the information provided in this video is intended to be general, so it's not tax or VAT advice. Every business's VAT and sales tax requirements will be different, so be sure to consult a certified expert to understand your business's specific obligations.

Okay, so our first tip for ecommerce sellers who want to expand into other regions is tip number one: get your books right. Ensure your transactional data is accurate and you're capturing, or prepared to capture, your sales tax, VAT, and GST. No matter which market you want to expand into, I think it's safe to say that almost every region requires solid record keeping and audit-ready data, should you need it. Accurate and automated records are key to this process. So we're going to bring in Victoria from MVP. Victoria, I'd love to hear what a solid bookkeeping system or process looks like for you for UK-based ecommerce sellers.

Victoria: Yeah, you certainly need to have the right processes and software in place to make sure that you're recording everything accurately. From a UK perspective, you need to first of all make sure that you're on the right VAT scheme for your business. If you're not sure, then talk to an ecommerce bookkeeper or an accountant who can analyse your business structure and check this out for you.

The next thing you'd need to do is make sure you've got the right software in place to capture your sales, VAT, holds, refunds, all of the extra things that happen in a sales deposit. Make sure that you're recording them accurately and have a good bookkeeper to maintain that for you. When I take on new clients, I often see mistakes with incorrect VAT rates being used, or balance sheet discrepancies because they haven't been reconciling their clearing accounts, and this can cost companies thousands.

So here's the bookkeeping checklist that I use when closing out the month for my clients, and it ensures that the client knows exactly which income streams or products are most profitable, and it also helps them identify their tax obligations. So feel free to download this checklist, it's linked in the description below, and you can also contact me if you've got any questions about it or would like extra help with your month-end bookkeeping processes.

Elspeth: That's brilliant, thanks for sharing that, Victoria. So I'll move to Elliot now. From Taxually's perspective, tell us a bit more about how you would view this part of the process.

Elliot: Sure, yeah, well, as Victoria mentioned, when it comes to your bookkeeping, it's essential that everything's done correctly, and it applies to your global tax compliance, your sales outside of the UK or outside of where your company's incorporated. Similarly, you want to be getting that data correct, sending the right filings to the relevant tax authorities, and you don't want to be making mistakes that can end up costing you fines or penalties down the line.

Elspeth: Yeah, absolutely, because it can be costly.

So Victoria, earlier you mentioned that having a good bookkeeping system in place was really important. Part of the reason we wanted to do this video is because we know that A2X and Taxually can work really well together to support that sales tax and VAT piece, especially for any brands that are interested in growing globally. Could you speak to us about how A2X and Taxually work together in that process?

Victoria: Yeah, that's a really good question. Making sure that you've got the right software, like A2X and Taxually, is vital when you're looking to expand. A2X is the software that's really going to help make sure you've got those accurate sales figures in your accounting software, such as Xero or QuickBooks. We've mentioned splitting the sales by certain regions, but it's even got the capacity to split the sales out by individual countries. There's so much you can do with it, the more advanced into the settings you go, the more accurate data you can get. So that's making sure you've got the right full picture in your accounting software, whereas the real value of Taxually is making sure you have the right compliance in place to actually submit those tax returns with full peace of mind, everything's covered and accurate. So it's another great piece of software where everything syncs together, and you can see in one place, in your accounting software, the actual tax due, when it's due, and know that it's been recorded accurately.

Elspeth: So tip number one, just to recap, the main takeaway is: before you sell in a new country, make sure every sale, fee, and refund drops into your books with the right tax code automatically. It'll save you a big headache getting that right from the start.

Tip number two is run a compliance checklist before listing in a new market. Even with a solid bookkeeping setup like we've spoken about, it's important to ensure you're compliant with tax laws in new regions before you start selling there, because as Elliot mentioned, mistakes can be costly, so it's best to be proactive and get it right from the start. So Elliot, I think you're going to tell us a little bit about some checks you can do before you start selling in a new country to make sure that you stay compliant.

Elliot: Yeah, absolutely. When you're looking to expand, firstly that's a great step for any business and it's exciting, but at the same time it does come with risks and often just annoying complexities. You're an entrepreneur, you want to sell more, you want to sell to more customers in more countries, and tax gets in the way, and that's something we're trying to remove.

In terms of a checklist and a really important thought process for merchants to go through, it's firstly about where they're storing goods and how they're getting their goods to the end customer. A really good litmus test, particularly in the EU, is if you're storing physical goods in a country on the continent, that's going to require a VAT registration in that country. So whether you've got a 3PL in the Netherlands, Germany, or France, immediately, if you're holding physical stock in a warehouse, you're going to need a VAT number.

Then it goes beyond that, well, what was your ambition in expanding in the first place, and who are you trying to reach? Because even once you've got your goods on the continent, you've then got the cross-border piece. Let's say you had a facility in Germany or the Netherlands and wanted to sell to other European countries, there will be cross-border rules you'll have to stay compliant with even within the EU. That's where something called OSS, One Stop Shop, can actually help you sell cross-border within the European Union, and that's something we can help everyone get registered with and do their filings for.

Alternatively, let's say you don't want to use a logistics hub on the continent to start with. A lot of sellers like to test the European market by using something called Import One Stop Shop, or IOSS, which essentially allows the business to send the goods from the UK facility or warehouse straight to the consumer in France, Spain, Italy, etc. That only applies to low consignment goods, and there are a few other things to consider, we're not going to go into all those details on this call, but just to give you that understanding, those are your options when expanding to the EU.

And then finally, a brief piece on product compliance and EPR. If any of you are selling on Amazon you may already know what EPR is, Extended Producer Responsibility. That's another thing we're seeing more sellers come to us for, and something we help them with because the marketplace is really pushing it now. And equally with product compliance, if you're selling things like supplements or cosmetics, that's something we can help you with too. Different countries, and the EU especially, have different rules and regulations around what's okay to sell to consumers. So it's important to consult ahead of that, because the last thing we want is for you to get banned from a marketplace, or have tax penalties down the line if you haven't got a registration in place. One of my clients found out the hard way, he got deregistered in one of those countries, and it's a very difficult process for him to get back in there because of previous issues. So that's important to have in mind, and again, if you want to speak to us, reach out, we can guide you through that process.

Elspeth: That's great, super helpful, Elliot, thanks for sharing that with us. Okay, so far we've covered that UK-based ecommerce businesses who want to expand globally need to firstly have their records in order, and then secondly do a compliance check before they start to sell into another region, taking into account all of those different variables we've spoken about.

Now we're going to run through a few more quick but important tips that can help UK businesses expand globally and stay compliant.

Tip number three is monitor thresholds. In the same way you'll have monitored your UK sales to see when you went over the UK VAT threshold, you'll also want to monitor your thresholds in other countries you expand into. Growth spikes in sales can quietly push you over foreign tax limits, so it's important to keep an eye on these. So Elliot, maybe you can tell us what we mean when we talk about a tax threshold.

Elliot: Yeah, so different countries have different financial thresholds that apply to sellers selling into those markets, even within the EU, but also across North America broken down by each state. Why sellers need to be aware of this is, in the US, some states like California have a half a million US dollar threshold, so if you go above that you need to register for sales tax, whereas in Florida that limit's only $100,000.

Another consideration, states like Illinois actually have a transaction threshold as well as the $100,000, in that case it's 200 transactions. So for some of you, maybe selling lower ticket products, maybe $10 items, you might be doing 50,000 of those thinking, well, I'm way below $100,000, but actually you're way above the 200-item threshold. So it's just worth bearing those in mind.

When it comes to the EU side of things, fortunately the One Stop Shop scheme takes care of those cross-border thresholds within the EU. So if you have an OSS registration, storing goods in one European country and selling to others, the OSS removes those thresholds for you, it's a really great tool for that. So when you think about the EU, OSS can cover that, and on the States side it's broken down by state, it is quite complicated, but we do offer a nexus analysis that can help sellers navigate that and register where it's appropriate.

Elspeth: Yeah, I think that illustrates how much it can vary from state to state even. Is there anything else they should consider when it comes to those thresholds?

Elliot: Yeah, sure. More on the requirements piece as well as thresholds, if you are storing physical goods in a country outside of the country of your incorporation, so if you're a UK business storing goods in an EU country, you will need a VAT number in that country, whether it be the Netherlands, France, Germany, or Spain. Any of those countries within the EU where you're storing goods, you will need to register for a VAT number. And then if you're selling cross-border from that country, you'll then also need the OSS, so those work in conjunction together.

And then similarly on the US side, we just talked about the economic nexus, the $100,000 limit, but there's also the physical nexus. So if you're storing goods, similarly to the EU, if you've got warehouses in Florida or California, that can trigger a sales tax requirement as well. So that's also very important to bear in mind.

Elspeth: And you can assess all of that for them if they came to you for advice, Elliot?

Elliot: Yeah, absolutely. When businesses come to us, we have a free consultation call, and we really try to understand their ambitions as a business and their existing setup, including from a logistics perspective, we do work with a lot of logistics providers in the space to support their clients when registering in new regions. We'll ask them where they're storing goods, as well as their existing financial figures, so we can best guide them through the registration process.

Elspeth: That's great. Is there anything else that sellers should be aware of as they listen to this video?

Elliot: So particularly on the EU side, and particularly if you're an Amazon seller, there's something called EPR, Extended Producer Responsibility. Some of you may or may not already be aware of this. Essentially, it's an eco tax, and a number of countries, not all of them currently enforcing it, but Germany, France, Spain are really good examples. EPR puts the burden of product waste on you as a seller, think packaging, paper, batteries, plastics.

Amazon is really pushing sellers to get EPR registrations and filings in those countries so they remain compliant for the waste product they put on the market. So as a seller, it is being pushed on you. If you're already selling on Amazon you might be aware of this, if you're not selling on Amazon it might not be front of mind, but it is something coming into play more and more often as we're seeing that trend grow, and other marketplaces might already be pushing it as well. If you have any questions, feel free to reach out, we have a whole eco tax department, a fantastic team, and they can really help you stay compliant from an environmental waste perspective.

Elspeth: Yeah, I think those are really important considerations when branching out. I'm going to ask Victoria as well, from the bookkeeping and accounting side, how do you use the accounting data, the ledger, to confirm if someone is reaching thresholds and decide whether to register or change strategy?

Victoria: Yeah, it's a good question. It really emphasizes the need to have a good bookkeeper set up your A2X account for you. For example, if you're selling on Shopify globally, by default everything's just going to go into one Shopify sales account, and this would be the same for other platforms like Amazon too. That would mean you wouldn't really have an easy way of viewing your sales by country in your accounting software. But that's the beauty of using a tool like A2X, because it scales with your business, you can enable additional settings to split the sales by country or region, and use tracking categories in Xero or classes in QuickBooks to split those sales out by country or region so you can see an accurate P&L split out by country.

Once you're approaching those thresholds, you'd need to weigh up the true cost of expanding in that region. At that stage, I'd recommend running a few scenario-based forecasts that look at the impact of expanding into that region, based on your current sales pattern. This would include the impact on cash flow as well, having another tax registration and the associated costs with that. You'd also, as Elliot's already mentioned, need to weigh up the cost of storing your inventory, and have a good plan for where you would store that inventory, because the country you store it in will have an impact on your tax too.

Elspeth: Yeah, absolutely, it makes a big difference where you're storing your products. Okay, that's really helpful. So I think the key takeaway from this tip is: keep an eye on your thresholds, use software to help you split it out and have more visibility, and just keep an eye as you're increasing your sales through different regions.

So tip number four is close the loop on tax and VAT returns. An important piece of selling globally is ensuring you file any necessary tax or VAT returns, and it's also important that as you're filing those, as you're remitting this money to various authorities, you're also reconciling that and keeping it all tidy inside your accounts. So Victoria, I'm going to go to you first: how can businesses manage the bookkeeping side of those tax filings and ensure they're getting good reconciliations at month end?

Victoria: Yeah, it's really important to review the VAT return before just hitting submit. This would include reconciling your profit and loss report back to the sales channels. If you use Shopify and Amazon, A2X has a really good feature that helps you do that. Once you're happy that the overall sales are recorded correctly, you'd also want to reconcile your balance sheet, including the VAT account. When you review your balance sheet, you should always know exactly what the figures on it relate to. Once you've done that, if you know your VAT is correct on your balance sheet, you'll know your VAT is correct on your VAT return as well.

And if you're selling on Amazon or eBay as a UK seller, this would also mean making sure the VAT you're reclaiming on your fees matches back to the sales platform. That's a really big mistake I often see when taking on new clients, even really large sellers, that they've missed out on a lot of VAT they could have claimed back on their VAT returns because they didn't complete this reconciliation process.

Elspeth: Yeah, that's so true, Victoria, there's so much that can be done, especially around Amazon VAT changes, and you've had some success with that with customers recently, haven't you? Okay, awesome.

So tip number five is forecast the tax cash crunch. What does this mean? Well, tax payments often fall due right when you're funding inventory or ad spend, or working on some other project that's going to hit your cash flow. So seeing the tax cash crunch in advance lets you time your campaigns or finance whatever growth you're working on as a business, so you don't stall for lack of cash. That money, that tax money, belongs to the tax authorities, it's not business money, so it's really important to have a good plan in place for making sure you have it available to remit it when you need to, and that it doesn't impact your other business operations.

So Victoria, I'll go to you first again, and then I'll get Elliot to weigh in. How does the bookkeeping workflow you spoke to earlier on help mitigate a cash flow issue when that tax is due?

Victoria: Yeah, because keeping your books up to date in real time doesn't just record what's already happened, it gives you early warning signs and the tools you need to respond to any changes in your sales pattern. If you use a 13-week cash flow forecast, that means you can get ahead of any unexpected tax bills, as it will identify a spike in your sales that you might need to keep extra cash aside for. It can also identify if you're relying too heavily on the dates your Amazon deposits hit the bank account, and just flag that up if it's going to cause an issue. For example, if your VAT bill is due on the 7th of June, but your Amazon deposit doesn't hit the bank account until the 10th of June, it will identify if there's going to be a period where the cash available in your bank isn't going to cover the costs.

So we've got on screen a simplified example of what a 13-week cash flow forecast would look like. 13 weeks is usually the industry standard for what we'd recommend looking ahead for an ecommerce business. This graph is simplified, in your situation we'd make it more bespoke for your own business, so we can see all the different types of expected outflows over the month versus the sales we're expecting in cash, or cash that's going to land in the bank account.

With all of the report packs I'd offer my clients, you get a personalized pack with not just the cash flow, but other management report packs tailored to your business requirements. When you get that pack, we can talk through the information using the graphs and other reports pulled from your accounting software, such as Xero, so you can accurately look at what the impact is going to be over the next few weeks, what you need to address, what issues are potential red flags that need urgent attention, and what things are just ticking away in the background that you need to monitor. It really gives you that extra peace of mind when looking at your business figures, understanding first of all where cash is going, and also what you need to plan for the future.

Elspeth: So you'd be putting together some of those reports on behalf of your clients just to give them some forewarning?

Victoria: Exactly, yeah.

Elspeth: Amazing. Okay, so from the Taxually point of view, Elliot, I know you've got some tools in your system that can help sellers with this as well.

Elliot: Yeah, absolutely. Within the app, we have a filings calendar section, which basically breaks down the dates by which you need to submit the payments for each country, which is great if you're selling in loads of jurisdictions, because each jurisdiction might have a monthly or quarterly filing, and they can fall on different days in the month. So for sellers, it's really helpful to be able to go in there, have a look, see what's coming up, and forecast that. And again, as Victoria mentioned with VAT and sales tax, you do need to send that to the authorities, it's not your money at the end of the day. So the filings calendar really comes in to help, and it's something we have as standard for all our clients.

Elspeth: That sounds like a really good tool. So I think the key takeaway for our fifth tip is: run a cash flow forecast that shows VAT and sales tax payments and timings, and that helps you avoid big marketing pushes or other projects running into cash flow issues when you need to pay those tax bills.

So to wrap up, we had five top tips today for expanding globally. The first tip was get your books right. The second was run a compliance checklist before you branch out. The third is monitor your thresholds in different zones. The fourth is close the loop on tax and VAT returns. And the fifth is forecast ahead for your tax payments and avoid that tax cash crunch.

This has been a great session, and it's been really great to have you here, Elliot and Victoria. Any more thoughts you'd like to share before we wrap up?

Elliot: Sure, yeah, I'll break it down by merchants and accountants as two separate groups. Starting with merchants, with the sellers, I think when you look at global expansion, there's a real opportunity there, particularly with more customers and often less competition abroad. It's always worth thinking, what's this market looking like, is there an opportunity for me to sell here? We're already seeing this pick up now with North American brands looking at Europe, post-tariffs, as an opportunity to sell their products, and vice versa with European and UK brands exploring North America more than before.

I think timing is really important, and before long it's going to be Q4, which for most people is their biggest sales period, Black Friday, Christmas, etc. It's important to know that it takes time to get these registrations in place. If you want a VAT number in Germany, it can take two to three months from the point of document submission. Looking at going into September, October, you really want to have your tax set up ahead of selling in these markets, you don't want to be doing it the night before Black Friday, you want to have a market presence already. So just think ahead for the rest of the year, if you're trying to grow your business, which I think everyone should be, then really have that timetable in place and start the process now.

That's for the merchants and sellers. When it comes to accountants, I think it's really important to look at your client base today and ask yourself, what am I currently doing to support my clients who sell internationally, or want to sell internationally? I imagine a lot of accountants listening to this will have international ecommerce sellers, and we've found in our experience that they either don't have a solution in place, or maybe they have someone they sometimes refer to, but there's no fully formed approach that, if a business comes in with global tax needs, they can help them with, and that can mean losing business or losing revenue. There's money on the table for a lot of accountants who can support their clients with global taxes.

That's where we come in. Not only is Taxually someone you can refer business to and get support from, but as a software solution we also offer a white label service that's already been taken up by a number of accountants, you essentially offer the service in-house using our platform, and Taxually supports you and your clients with those filings. I think that's really appealing, especially from a customer lifetime value perspective, as well as the stickiness and customer satisfaction. And if you're pitching for business against other bookkeepers or accountants and you start talking about international tax, if the other firm doesn't have something in place, you're likely to really stand out and win that business, not on price, but on the quality of service you're able to offer. So if anyone's listening to this and thinks that fits them, feel free to reach out. My role here is managing accountancy partnerships, and I'd be happy to take you through the process and explain what we can support you and your client base with.

Elspeth: Thanks, Elliot. Victoria, have you got anything to add?

Victoria: Yeah, just to reach out really to the sellers watching this. If you're a small seller at the moment looking to grow, or you're already a large established seller looking for more accounting support, then do feel free to reach out. I regularly come across clients who've been working with a previous accountant or bookkeeper for a while who perhaps doesn't have specific ecommerce knowledge, and you just need a bit of extra support alongside your existing accountant, or if you're looking to make the switch to an ecommerce-specific accountant, I'd be really happy to help you out. So just reach out and we can have a free consultation.

Elspeth: Thanks, Victoria. That's brilliant. I think we can all agree that there's a real opportunity here. Done right, you can expand globally, there are opportunities for accountants and bookkeepers who are serving clients that want to do that, but also for the sellers themselves as they expand. It's been great to hear your thoughts today, Elliot and Victoria, really appreciate you being here, you are real experts, and I know you're supporting customers every day with this. If you have questions, please check them out, reach out to Elliot at Taxually or reach out to Victoria at MVP. If you have questions about A2X, feel free to reach out to me. Have a great day, everybody.